Differences between internal and external audit Essay

Differences between internal and external audit - Essay Example Differences between internal and external audit Internal and external audit differs in terms of objectives, scope, level of independence of the auditor, and methodology. Objectives The internal auditor’s objective is to ensure that sound risk management and control systems are in place to prevent errors and fraud from occurring. The external auditor’s objective on the other hand is to ensure that the accounts show a true and fair view. Therefore the necessary tests should be carried out to ensure that the financial statements can be relied upon to give a true and fair view. Scope of Work The scope of the internal auditors work is dependent on the management and directors of the organization. It is normal that less emphasis is placed on materiality considerations. The scope of the external auditor’s role is laid down in the state. Their primary concern is to ensure that the financial statements are free from material misstatements. Independence The internal audito r’s is employed by the organisation and the internal audit function is determined by management. ... University The internal audit at a University would report to the University Council through the Audit Committee on the systems of governance, internal control, value for money and the extent to which strategic initiatives that have been undertaken at the University are achieving their goals. The scope of the internal auditors work is wide as it covers non financial areas within the University. It consists of multiple audits in any one year and involves a range of areas in the University’s operations. Internal audit is would be part of the internal control system of the organization. The internal auditor would be required to prepare a risk based plan annually. The work will be performed on the most risky aspects of the University’s operating environment first. External Audit Procedures at a University The external auditor’s procedures which represents a statutory requirement checks whether the University’s accounts present a true and fair view of the finan cial position. A plan is prepared based on an assessment of the University’s operating environment. This activity is normally performed at after the end of the financial year. However, the external auditor may seek to carry out an interim audit during the course of the year so as to lessen the amount of work done at the final year end audit. The interim work normally include risk assessments to determine where weaknesses exists that could result in material misstatements of the financial statements. The external auditor would also evaluate the work of the internal auditor to determine if the external audit work could be reduced (CICA 2010). Similarities between Internal and External Auditors Both internal and external auditors are required to plan their work in relation to their objectives in carrying out